Holding Communal (14.1% shareholder) has received a guarantee (50% Flemish region, 25% Walloon region and 25% Brussels region) on € 450m of funding. There are two conditions: Holding Communal may not pay a dividend for FY11 and must in a controlled way reduce its € 1.7bn debt, most of which is with Bank. Holding Communal is confronted with the problem that it borrowed money to participate in Dexia’s capital increase while the strong drop in the valuation of its stake has led to a negative equity. bank was also demanding guarantees to prolong its lending to the Holding.
Ethias (5.0% shareholder) will sell its stake to the mother company, Ethias Finance, which is 75% (25% Federal, 25% Flemish, 25% Walloon) State owned. In doing so, the Belgian anchorage is maintained and Ethias avoids selling to the market or to the other reference shareholders that dispose of a pre-emption right. Under the EC-approved restructuring plan, Ethias was to sell 90% of its stake before end 2012.
Our View:
With the two announcements a risk for shift in balance of the shareholding structure of or a potential share overhang has been avoided.
Conclusion:
We remain Accumulating with an unchanged target at 3.50.